On November 21st the U.S. Department of Health and Human Services Center for Consumer Information & Insurance Oversight (CCIIO) issued a memorandum outlining standard notices that are required to transition certain cancelled or terminated health insurance policies to comply with the Affordable Care Act (ACA). The November 21 memo follows a memorandum released last week outlining a transitional policy that would allow insurers to choose to continue coverage that would otherwise be terminated or canceled and would allow affected individuals and small businesses to re-enroll in such non-compliant coverage.

If insurers decide to continue offering plans that do not comply with ACA requirements, the transitional policy announced last week requires insurers to comply with certain conditions in order to continue offering such plans through 2014. One such transition condition is that insurers must provide a notice to all individuals and small businesses that received – or would receive – a cancellation or termination notice. The notice must inform policyholders regarding:

Changes in available options;

Which market reforms would not be reflected in any continuing coverage (e.g., pre-existing condition exclusions, discrimination based on health status, limits on out-of-pocket costs, coverage of essential health benefits, and coverage for clinical trials);

The potential right to enroll in a qualified health plan offered through an Exchange and possibly qualify for financial assistance;

How to access such coverage through an Exchange; and

The right to enroll in coverage outside of an Exchange that complies with ACA market reforms.

CCIIO’s November 21 memorandum provides standard notice language that insurers must send policyholders in order to satisfy these requirements. The standard notices explain that policies “will NOT provide all of the rights and protections of the health care law” and that “[t]he Marketplace allows you to choose a private plan that fits your budget and health care needs. You may also qualify for tax credits or other financial assistance to help you afford health insurance coverage through the Marketplace.”

The notice must be delivered to policyholders separately from any other plan materials or correspondence, and for insurers that decide to cancel coverage, the standard notice language must be prominently displayed in all cancellation notices.

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